June 30 (Bloomberg) -- OPEC crude production climbed for a
second month in June as gains in Saudi Arabia and Nigeria made
up for the loss of Iraqi barrels, a Bloomberg survey showed.

Production by the 12-member Organization of Petroleum
Exporting Countries rose by 278,000 barrels a day to 30.223
million, according to the survey of oil companies, producers and
analysts. Last month’s total was revised 43,000 barrels a day
lower to 29.945 million because of changes to the Kuwaiti,
Libyan and Ecuadorian estimates.

Violence flared in Iraq, OPEC’s second-biggest producer,
this month as a militant group seized Mosul, the country’s
biggest northern city, and advanced south toward Baghdad. Fears
that the upsurge may ignite a civil war sent prices higher.

“There was panic when the first headlines came from
Iraq,” said Bob Yawger, director of the futures division at
Mizuho Securities USA Inc. in New York. “There may have been an
overreaction elsewhere. Things have stabilized and it doesn’t
appear that all of those additional barrels will be needed.”

Brent crude for August settlement dropped 94 cents, or 0.8
percent, to close at $112.36 a barrel on the London-based ICE
Futures Europe exchange. Brent, the benchmark for more than half
the world’s oil, reached $115.71 on June 19, the highest level
since Sept. 9. West Texas Intermediate oil fell 37 cents, or 0.4
percent, to settle at $105.37 on the New York Mercantile
Exchange.

Iraqi Output

Iraqi production tumbled 400,000 barrels a day to 2.9
million this month, according to the survey. It was the biggest
drop in June and left the country pumping the least oil since
September.

The fighting hasn’t spread to southern Iraq, home to about
three-quarters of the nation’s oil output.

The production cuts occurred in the north, where the
pipeline from Kirkuk to Ceyhan on Turkey’s Mediterranean coast
has been shut since March because of sabotage. The missing
output would have supplied Iraqi needs. The 310,000-barrel-a-day
Baiji refinery, Iraq’s biggest, has been closed since militants
first attacked it on June 15.

“It looks like Iraq will continue to pump between 2.5 and
3 million barrels a day as long as the situation doesn’t get a
lot uglier,” Yawger said. “The missing oil was mostly meant
for domestic use anyway.”

Saudi Boost

Saudi Arabia, the group’s biggest producer, boosted output
by 230,000 barrels a day to 9.9 million. That was the highest
level since September, when the desert kingdom pumped 10 million
barrels a day, the most in monthly data going back to 1989.

Fuel consumption in the Arabian peninsula peaks in the
summer months, when high temperatures lead to increased use of
air conditioners.

“They usually produce more in the summer to directly burn
for electricity that’s needed for air conditioning,” said Mike
Wittner, the head of oil market research at Societe Generale SA
in New York. “I also expect them to keep increasing production
to meet global demand.”

Saudi Arabia is pumping additional oil for storage to keep
the market comfortable about supply. The country holds 2.6
million barrels a day of spare crude production capacity,
according to data compiled by Bloomberg.

“We are going to see new records from the Saudis in the
months ahead,” Wittner said. “They will have to pump at least
10.2 million barrels a day or more in the third quarter. They
can easily attain this.”

Highest Output

Nigeria’s production rose 200,000 barrels a day to 2.15
million in June, the second-biggest gain in the survey. It was
the highest output since September. Figures for Africa’s biggest
producer are volatile because of unrest and theft in the Niger
River delta, the main oil-producing region.

Crude production in the United Arab Emirates climbed by
100,000 barrels a day to 2.8 million this month, the most since
October. Output climbed on higher exports to Asia to meet summer
demand there.

OPEC ministers kept their output target unchanged at 30
million barrels a day on June 11 in Vienna. The group next meets
on Nov. 27.